© 2024 KENW
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

U.S. Judge Approves AT&T's $85 Billion Merger With Time Warner

AT&T and Time Warner are not competitors; their proposed merger would be a "vertical integration" of complementary companies.
Stephanie Keith
/
Reuters
AT&T and Time Warner are not competitors; their proposed merger would be a "vertical integration" of complementary companies.

Updated at 6:02 p.m. ET

A federal judge on Tuesday gave his blessing to telecom giant AT&T's drive to take over the Time Warner media conglomerate. U.S. District Court Judge Richard Leon rejected arguments by Justice Department lawyers that the combined company would be too large and too powerful and that the $85 billion deal would harm competition and hurt consumers.

Time Warner owns CNN, HBO, Warner Bros. Entertainment and a passel of cable channels including TNT, TBS and the Cartoon Network.

In seeking to unify, the two companies argued that a new crop of competitors cast an ominous shadow over their businesses: Netflix, Amazon and Apple in content and distribution; Google and Facebook in advertising.

Leon, based in Washington, D.C., said the evidence and testimony provided by the government were faulty and that it never proved the merged entity would have increased leverage over its competitors.

"Ultimately, I conclude that the Government has failed to meet its burden to establish that the proposed transaction is likely to lessen competition substantially," the judge wrote.

Assistant Attorney General Makan Delrahim said the government was disappointed in Leon's ruling. "We will closely review the Court's opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers," Delrahim added in a statement.

In its own statement, AT&T said, "We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative."

In his decision, Leon weighed in on a case that carried political overtones, scrambled typical ideological alignments and triggered close attention from corporate executives beyond media.

On the campaign trail in October 2016, then-candidate Donald Trump spoke in Gettysburg, Pa. He noted that Time Warner owned CNN, and then declared his opposition to the $85 billion proposed sale. It is, he said then, "a deal we will not approve in my administration because it's too much concentration of power in hands of too few."

Trump's call holds a populist appeal and won some support across the ideological divide. As Gigi Sohn, a former top aide to the Federal Communications Commission chairman under President Obama, put it during the trial, "If we return to a place where ... there's a presumption that big is bad — bad for democracy, bad for consumers — I think that's a good place for antitrust law and antitrust enforcement to be." Delrahim, Trump's appointment as the antitrust chief at the Justice Department, is widely well-regarded.

Yet Trump's antipathy for CNN is so strong and well-known that it colored public perception of the case. In those remarks at Gettysburg, Trump preceded his declaration about corporate ownership with a dig at the "corruption" of what he called "the dishonest mainstream media."

Trump's frequent attacks on CNN led to much speculation, including from AT&T Chairman and CEO Randall Stephenson, that the president's opposition stemmed from anger over the network's coverage rather than concern over greater corporate consolidation. AT&T lawyers initially sought email correspondence between Trump's White House and the Justice Department, but Leon declared that any communications were not relevant to the trial, and AT&T relented.

Even so, the case brought last year by the antitrust lawyers at Trump's Justice Department to block the AT&T and Time Warner marriage is an outlier.

AT&T and Time Warner are not competitors; theirs would be a "vertical integration" of complementary companies: Time Warner makes the TV shows (and movies and news programming and so forth), while AT&T offers the satellite and cable TV services and mobile phone systems on which people consume such content.

The case is commonly characterized as the first major "vertical" deal challenged by federal lawyers in court in more than four decades. Had Leon ruled in favor of the government, the consequences would have reached far beyond media, to tech, health care, finance and other major fields.

Trump's antitrust lawyers and regulators have not pursued a consistent line against increased consolidation; under newly elevated Chairman Ajit Pai, a Republican, the FCC has swept away many regulations limiting how many stations a single company can own.

That has worked to smooth the path of Sinclair Broadcast Group as it seeks to acquire Tribune Media. Sinclair owns more TV stations than any other broadcasting company; Tribune would give it several dozen more. While federal regulators did require the disposal of some properties to satisfy what they characterized as anti-competitive local market situations, Sinclair appears poised to sell some of them to owners with whom it has strong corporate history and ties.

Similarly, when the Walt Disney Co. announced it would acquire most of 21st Century Fox, Trump called Fox's controlling owner, Rupert Murdoch, not to bemoan but to congratulate him — and reportedly to make sure that Murdoch wasn't selling Fox News. (He's not.) Comcast is circling Fox as well, making it clear it plans to disrupt the Disney-Fox union, but did not want to make a formal offer until after Leon's ruling.

Trump has suggested he might want to reopen a review of an earlier deal that has many parallels to the AT&T takeover of Time Warner: Comcast's takeover of NBC Universal. Such suggestions have been accompanied by frequent denunciations of MSNBC and NBC journalists — who work within the Comcast empire.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

David Folkenflik was described by Geraldo Rivera of Fox News as "a really weak-kneed, backstabbing, sweaty-palmed reporter." Others have been kinder. The Columbia Journalism Review, for example, once gave him a "laurel" for reporting that immediately led the U.S. military to institute safety measures for journalists in Baghdad.
Yuki Noguchi is a correspondent on the Science Desk based out of NPR's headquarters in Washington, D.C. She started covering consumer health in the midst of the pandemic, reporting on everything from vaccination and racial inequities in access to health, to cancer care, obesity and mental health.